Katzenberg Unveils China Film Project

With his "Kung Fu Panda" movies, Jeffrey Katzenberg offered American audiences a cuddly Chinese icon to love, and won the hearts of China's cultural czars, who are eager to soften the country's image in the world.

On Friday, the chief executive of DreamWorks Animation SKG Inc. unveiled his latest China film project—"Tibet Code," an Indiana Jones-type adventure story based on a wildly popular series of recent Chinese novels set in 9th-century Tibet.

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Jeffrey Katzenberg poses for photos with a giant panda at the Chengdu Panda Breeding Base in Chengdu of southwest China's Sichuan province.
ZUMAPRESS.com

The Hollywood power broker has lately turned his marketing skills on China, which is expected to surpass the U.S. box office by the end of the decade, driven by a boom in cinemas across the country. China's policies on Tibet are a persistent target of Western human-rights critics, and a constant challenge to its international image. But Mr. Katzenberg dismisses suggestions that "Tibet Code" serves any political purpose.

"When I read the books I thought 'Wow! This is just a blockbuster story, '" he said after a news conference in Beijing to announce the co-production along with the Chinese partners of Oriental DreamWorks, Mr. Katzenberg's China venture. "There's no secondary agenda."

"Tibet Code," he said, "has all the makings of a world-class, quality, blockbuster franchise."

Han Sanping, the chairman of China Film Group Corp., the powerful state distributor, ascribed a broader goal to "Tibet Code." He hailed it as a vehicle to portray to the world "Chinese values" and "Chinese morality" as well as its history, culture and landscape.

"It's the perfect combination of content and form," said Mr. Han, seated beside Mr. Katzenberg at the news conference and wearing a gray Mao jacket.

Hollywood has a troubled history with China over Tibet. "Seven Years in Tibet," starring Brad Pitt, infuriated Beijing with its sympathetic portrayal of the Dalai Lama, Tibet's exiled spiritual leader, who is reviled by China. "Kundun," a Disney film directed by Martin Scorsese, about the life of the Dalai Lama, likewise outraged China's propaganda authorities. It took years for Disney to undo the damage. Movie-industry insiders question whether such films could even be made these days, given China's growing market importance.

Hollywood studios are aggressively pushing for partnerships in China to get around a strict quota on imported films, and rules that bar imports from taking home more than 25% of sales. Last year, News Corp. agreed to acquire a 19.9% stake in Beijing-based Bona Film Group, one of China's largest film distributors. (News Corp., the publisher of The Wall Street Journal, is the parent of Twentieth Century Fox, which has a distribution deal with DreamWorks.)

Walt Disney Co. forged a partnership with the animation arm of China's Ministry of Culture and China's biggest Internet company, Tencent Holdings Ltd., and co-produced "Iron Man 3" with Beijing-based DMG Entertainment. The company says it is on track for the late 2015 opening of its planned theme park in Shanghai.

Mr. Katzenberg works tirelessly to cultivate high-level ties in China. The calling cards he hands out on his regular visits—he flies in on average once a month—advertise his branding skills. The English-language side carries the famous DreamWorks logo of a boy fishing while seated on a crescent moon. Flip the card over to the Chinese side and the logo changes to a panda fishing off a Chinese brush-stroke moon—painted red.

In Hollywood circles, Mr. Katzenberg has positioned himself as Mr. China. When China's then leader-elect Xi Jinping visited the U.S. last year, the White House sat Mr. Katzenberg at the head table at a lunch for him.

For Mr. Katzenberg, "Tibet Code" is the product of a business quest that began two years ago when he fired off an email to an executive at the Shanghai Media Group, an ambitious broadcasting group owned by the government of China's commercial capital. He was looking for an answer to a question that was vexing him: how could he break into China's tightly controlled entertainment business? His message to the fluent English-speaking Li Ruigang was to the point. "I'm Jeffrey Katzenberg. I want to talk to you," Mr. Li recalls.

The talks that followed have led to an extraordinary opening for Mr. Katzenberg in China. He has put together a joint venture production studio in Shanghai to churn out high-quality animated movies aimed at scoring box office successes both in China and internationally. The first production on the drawing boards: the third installment of "Kung Fu Panda."

His Shanghai studio deal has since ballooned into a grander project to develop a stretch of Shanghai riverfront into a culture and entertainment zone that Mr. Katzenberg likens to New York's Broadway, or Paris's Champs-Élysées.

"We did it very quickly," says Mr. Li. "His strategy is moving very fast and effectively, unlike some of the other big entertainment companies with layers of managers."

The studio venture will be run by the company where Mr. Li is chairman, China Media Capital, a four-year-old investment fund founded and capitalized at 5 billion yuan ($820 million) by Shanghai Media Group, China Development Bank and other shareholders.

The other partner on the Chinese side is Shanghai Alliance Investment Co., a politically well-connected company formed by former Chinese President Jiang Zemin's son Jiang Mianheng. Shanghai's new mayor, Yang Xiong, was chairman in the 1990s of a Shanghai Alliance subsidiary called Shanghai Information Investment Inc.

"Politically speaking, this is a good project," one person involved said this week.

According to a DreamWorks regulatory filing last year, the project will be 54.55% held by the Chinese side, and led by China Media Capital. Shanghai Alliance and Shanghai Media Group will contribute a total $150 million in cash and noncash assets of $30 million.

For its 45.45% of the joint venture, DreamWorks will contribute $50 million in cash, plus kick in $100 million of intellectual property, including licenses. DreamWorks says terms of their deal include rights to veto certain decisions.

Polishing China's global image is a priority for a country that craves the international respect it feels it deserves as the world's second largest economy. It has invested billions of dollars in Confucius Institutes around the world, and in lavishly staffed and equipped news bureaus in New York and Washington operated by China Central Television and the Xinhua News Agency.

The Tibet issue is one of China's biggest public-relations headaches, and is inextricably tied up with China's efforts to stand proud in the world. Beijing believes that the U.S. and other Western countries raise human-rights concerns about Tibet deliberately to thwart its rise, distract its attention, and block the advance of a potential economic adversary. Criticism of Beijing has grown over the past year amid a wave of self-immolations in Tibetan areas of China.

The "Tibet Code" will transport audiences far away from these agonies to an exotic Himalayan Shangri-La created as fantasy.

Chinese censorship continues to be a major challenge for Hollywood. In April, Quentin Tarantino's "Django Unchained" was pulled from theaters on its opening day, with little explanation. Hollywood studios are commonly asked to revise their movies before release in China.

Mr. Katzenberg said that writing was about begin on "Tibet Code" and he is confident that "we will be able to find a good course to tell a great story and not step on political issues."

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